Lapses by CUNY Officials Made System ‘Ripe for Abuse,’ Report Says

Shoddy oversight and ineffective management at the City University of New York have created a system “ripe for abuse” that has potentially siphoned money away from needy students and crucial campus projects, according to a report released on Tuesday by the New York State inspector general.

The inspector general also found that decentralization at CUNY, the largest public urban university in the country, has enabled the presidents of individual colleges to dole out money or benefits to top officials “with no meaningful accountability.” At Brooklyn College, for instance, discretionary funds were used by the college president to pay a part-time housekeeper $36,000 a year, as well as for a retirement party that cost $35,000.

The report, which the inspector general’s office called an interim review, represents the first formal response to a request made last month by William C. Thompson Jr., the chairman of CUNY’s Board of Trustees and the former New York City comptroller, for a systemwide investigation of “all of the college foundations, alumni associations or other affiliated entities.”

Mr. Thompson’s request was prompted by the unexpected resignation of Lisa S. Coico as president of the City College of New York, a day after The New York Times contacted officials with questions about her administration’s handling of more than $150,000 of her personal expenses, and evidence that a memo related to those expenses had been fabricated.

Ms. Coico is one of several people, or entities, affiliated with CUNY who are now being investigated by the office of Robert L. Capers, the United States attorney for the Eastern District of New York. In a nod to the primacy of the federal inquiry, Catherine Leahy Scott, the inspector general, says in the report that her office is “not investigating the events surrounding the former City College president’s improper spending at this time.” That decision was made after consulting with federal prosecutors.

The report also criticizes CUNY for hiring an outside lawyer to initially review Ms. Coico’s case, rather than report suspected criminal activity to the inspector general, as is required by state law. That outside lawyer — whose services were terminated recently at the request of federal prosecutors — cost the university $180,000, and is part of a pattern of CUNY’s hiring external consultants and lobbyists “at significant cost to the public,” the report concludes.

It is somewhat unusual for the inspector general to release its findings from what it calls a “preliminary investigation.” But repeatedly invoking dire words like “fail” and “immediate,” the report said that because nonprofit foundations associated with CUNY maintain $1 billion in funds, “it is imperative that significant steps are immediately taken to strengthen the fiscal integrity and oversight of this system.”

The report also comes as students, faculty members and others gear up for another battle over the funding of CUNY in the next budget year. CUNY receives much of its money from the state, but also gets backing from the city and other sources. Its funding has been a point of contention between Gov. Andrew M. Cuomo and Mayor Bill de Blasio, both Democrats.

In a statement, James B. Milliken, the chancellor of CUNY, said: “I take the findings and recommendations of the inspector general very seriously, and will work with Chairperson Thompson, the Board of Trustees and the inspector general immediately to address the recommendations. CUNY must have in place the policies and practices that reflect and ensure the highest levels of integrity, accountability and transparency.”

When asked about the report’s findings, Dani Lever, Mr. Cuomo’s press secretary, said: “We are reviewing the report but are very troubled by it and considering the best recourse.”

One of the themes woven throughout the 22-page report is the notion that CUNY could redirect more money to helping students, many of them from poor families, pay the annual tuition of $6,330.

The report notes, for example, that the money spent by the Brooklyn College president on housekeeping could have provided full annual scholarships for up to six students.

It also takes aim at CUNY for spending $1.6 million on lobbying since January 2013, saying that some of the money “appears to be duplicative” and that “it seems clear that these activities warrant scrutiny and that centralization of these services should be explored.”

The report also revisits a well-chronicled controversy from 2013 involving a $300,000 annual pay package for the departing chancellor, Matthew Goldstein, who became chancellor emeritus. The report said that there was a “lack of scrutiny at the time,” and that the board “should be mindful of these issues” when making future appointments.

A version of this article appears in print on , on Page A22 of the New York edition with the headline: Poor Oversight Made CUNY Finances ‘Ripe for Abuse,’ State Inspector General Finds. Order Reprints | Today’s Paper | Subscribe